BT raises targets for ultrafast fibre optic broadband

Financial Times

Pressure from politicians and regulators triggers goal to connect 3m premises within 2 years

January 26, 2018
BT will next week unveil plans to speed up UK broadband to 3m premises within two years, in its latest bid to respond to intense pressure from politicians and regulators to upgrade the country’s internet connectivity.
The company will say that it intends to provide wider access for full fibre with a target of 3m premises within two years, according to people familiar with the company’s plans. Openreach, the BT division which maintains and develops most of the UK’s telecoms network, will also outline where in the country it plans to install fibre optic cables capable of delivering speeds of 1 gigabit per second.
Openreach had previously said it would connect only 2m buildings to “full fibre” internet by 2020 and that most of these would be businesses or new residential developments. That plan also included upgrading a further 10m premises to ultrafast broadband by that date, using technology that speeds up existing copper lines that run into a customer’s home.
The BT board still has to sign off the new proposals, which will add substantial costs for the company at a time when it is preparing to bid for the latest auction of Premier League football broadcast rights and trying to push through reforms to its costly pension scheme.
BT has come under increasing pressure from politicians, business and consumer groups to invest more in full fibre. The UK, where only 3 per cent of UK premises can connect to a line, lags far behind countries such as Spain and Portugal. In France, for instance, Orange expects to have built a full fibre network reaching 20m homes by 2021.
Sharon White, head of regulator Ofcom, said last year that full fibre was a “national priority”, and accused BT of holding the country back by not investing.
The government has launched a review of telecoms infrastructure investment plans and Matthew Hancock, the culture secretary, has been a vocal proponent of full fibre development.
BT rival Vodafone announced last year it was investing directly in its own full fibre network as part of a partnership with CityFibre, with plans to connect 1m homes and businesses across 12 cities by 2021.
Vodafone had been in talks with Openreach about a partnership to co-invest in full fibre but those discussions went quiet, said Nick Jeffrey, chief executive of Vodafone UK. “It’s been radio silence,” he said, adding that talks died when Vodafone announced its plan with CityFibre in early November.
Simon Weeden, an analyst at Citigroup, said: “[BT] is under pressure from competitors, not least Vodafone and CityFibre.”
Openreach has said it wants to upgrade 10m homes to full fibre connections by 2025 but that is dependent on reaching agreement with its largest customers, including Vodafone, Sky and TalkTalk to transfer their customers to the new network.
It has proposed that the wholesale cost of a broadband line should be increased by £7 to offset the cost of building the full fibre network, whether the end customer wants ultrafast broadband or not. That proposal has proved unpopular with the likes of Vodafone, Sky, TalkTalk and Ofcom.
One executive at a rival telecoms company said that Openreach paid only “lip service” to the benefits of fibre and that it made too much money from its existing copper lines to push for radical change. “I am not expecting a revolution,” he said.
Openreach declined to comment.